What is a Service Level Agreement (SLA)? Simple examples

What is a Service Level Agreement (SLA) in simple words?

A Service Level Agreement (SLA) is a defined contract between a vendor and a customer. SLAs help to set clear expectations about the service level definition that the provider (vendor) is obliged to fulfill in their vendor contract.

Service Level Agreements (SLAs) are important performance metrics that define what services will be provided and how their performance will be measured in real time. They set clear expectations, so everyone knows what to expect. If the service doesn’t meet the agreed standards, there could be penalties to keep things fair.

What is a Service Level Agreement (SLA) in technical support and service desk?

In technical support, SLAs are also crucial. It defines how quickly support teams should respond and resolve different types of problems, incidents, changes, etc. These SLAs are often managed within a dedicated service desk or helpdesk platform, which helps to track and monitor service agreements.

Imagine working in an IT department using a service desk to manage support requests. In this setup, a system failure with SAP system triggers an SLA metric that requires a response within 30 minutes and resolution within 2 hours. This ensures that the system crush is categorized into critical incidents, minimizing downtime.

ALVAO Service Desk allows organizations to customize SLAs across five levels, categorizing incidents based on urgency. For a high-priority system crash, the incident is classified as very critical, demanding immediate action. The system establishes clear response and resolution timelines and sends automated notifications as deadlines approach.

If a incident remains unresolved, alerts escalate to the assigned agent and service managers, ensuring accountability and maintaining service quality.

Service Level Agreement (SLA) example

Imagine you work in a company that provides IT services to their clients. One of your clients has an agreement with your company to provide email support. Your client and you agreed on the following SLA terms:

• Response SLA time of service requests: Your IT support team must acknowledge and respond to any email support request from the client within 1 hour during business hours from 9:00 – 17:00 o’clock, Monday to Friday.
• Resolution SLA time of critical incidents: Any critical email issue defined as an incident for instance an email server outage must be resolved within 4 hours. Non-critical issues such as email set up must be resolved within 24 hours.
• Uptime guarantee: The email server must operate 99.9% of the time each month.

Scenario – the email server is down:

• The client sends an alert at 10:00 o’clock reporting that their email server is down.
• Your IT support team acknowledges the incident by 11:00 o’clock, within the 1-hour response time.
• The team works on the issue and resolves it by 14:00 o’clock, within the 4-hour resolution time for critical incidents.

By meeting SLA metrics, your IT support provides reliable customer service, keeps high user satisfaction and maintains client’s trust.

Why are Service Level Agreements (SLAs) important?

SLAs are important for the following reasons:

• Clarity – In SLA metrics, both parties set clear expectations, including the service provider that can be an IT support team and the customer that can be in the form of a company.
• Accountability – The metrics ensure that the service provider keeps their promises and delivers the agreed level of service.
• Performance measurement – The metrics measures service performance.
• Customer satisfaction – SLAs help to manage and improve customer satisfaction.
• Legal protection – They offer legal protection for both parties if any disagreements arise.

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Challenges of Service Level Agreements (SLA)

Theory explains SLA metrics clearly, but reality often tells a different story.

These metrics are usually set by people focused on business goals, who might not have hands-on experience with IT support or direct client interactions. This can lead to high expectations that are tough to meet in real-world situations.

For example, imagine you’re an IT support technician and you get a request from a client about a laptop battery that doesn’t last long. The fix is to get a new battery that performs better. Normally, these batteries are in stock, but this time, the supplier has an outage, and the delivery will take five weeks.

Your SLA says you should resolve this type of issue within 24 hours, but now you must keep the request open for 5 weeks, waiting for the battery to arrive. As a result, you miss the SLA resolution rate, which could lead to some kind of penalty.

So how do you resolve these types of issues?

The easiest solution is to talk to IT support staff. They have a lot of experience with different customers. Create SLA agreements with their input. This helps set realistic expectations.

It can also save money while clearly defining what the company can offer. 

What are the 3 types of Service Level Agreements (SLA)?

• Customer-based SLA: An agreement with an individual customer group, covering all the services they use.
• Service-based SLA: An agreement for a specific service delivery that applies to all customers using that service.
• Multi-level SLA: A combination of both customer-based and service-based SLAs, tailored to different levels of service.

What is Service Level Management (SLM) and the difference between Service Level Agreement (SLA)?

Service Level Management (SLM) is an important part of IT Service Management. It helps manage and improve service levels based on agreed SLAs.

Service Level Agreement (SLA) is the practice that ensures providers deliver services to clients at agreed-upon levels.

The role of SLM is to set up expectations, define measurable goals and implement processes and strategies delivering high quality services within specific time.

The aspects of SLM are as follows:

• Defining service levels – Setting clear and measurable service targets.
• Ensuring compliance – Making sure all SLAs agreements are met.
• Monitoring performance – Continuously keeping an eye on service performance and comparing it with the SLA metrics.
• Regular reporting – Regular monitoring and reporting the actual performance to clients.
• Communication and service improvement – Making necessary adjustments to improve service quality and communicating with clients to keep them updated.

Why is Service Level Management (SLM) important?

The importance of Service Level Management (SLM) is to provide what customers are asking for. Customers often have high demands, so SLM must understand what it can provide to meet those needs effectively.

Demands may include unlimited storage and quick service. Management must approve these requests before finalizing any agreements with customers. This is important because it depends on resources like budget, infrastructure, and staff.

SLM is about finding a balance between those demands and what the customer is willing to pay.  

The example of Service Level Management (SLM)

Let's take an example of company's broken mobile phone. When your company’s mobile phone breaks, it’s important to have an easy way to get IT support. You can simply reach out through a dedicated service desk that ensures quick resolutions while keeping you updated.

With ALVAO Service Desk, users can use a customizable service catalog where they can easily raise tickets for issues like a broken phone. This makes reporting problems simple and gives you access to various mobile device services. The IT support team can respond quickly, so you get the help you need without the wait.

ALVAO Service Desk makes Service Level Management smooth and effective, ensuring you get the support tailored to your needs in a timely manner.

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What are the 3 phases of Service Level Management (SLM)?

1. Service Level Agreement development – Creating and negotiating the SLA metrics with the customer.
2. Service Level monitoring – Continuously tracking and measuring service performance against the SLA metrics.
3. Service Level improvement – Making adjustments to improve service quality based on performance data.

Conclusion of Service Level Agreements (SLAs) and SLM management (SLM)

SLM and SLA metrics are important in IT Service Management (ITSM). They make sure services are delivered based on clear agreements.

However, experts do not recommend rigidly following them. Instead, establish realistic expectations about what you can achieve. Understand what is just a sales point to attract customers when selling these services.